Logourl black

Ace Limited v. Capital Re Corp.

Delaware Court of Chancery
747 A.2d 95 (2000)


Facts

Ace Limited (Ace) (plaintiff) paid $75 million to Capital Re Corp. (Capital) (defendant) for 12.3 percent of Capital stock. Ace and Capital then negotiated a merger agreement. Under the agreement, Capital would retain control, but Capital shareholders would receive .6 of a share of Ace stock in exchange for each share of Capital stock. The agreement included a “no-talk” provision (§ 6.3) that barred Capital from negotiating or giving information to a third party about a possible proposal unless (1) Capital’s board determined that the proposal was likely to produce a better deal, (2) the board “in good faith…based on the written advice of its outside legal counsel” concluded it was required to negotiate or risk breaching fiduciary duties, (3) the party signed a confidentiality agreement, and (4) Ace was given notice that Capital intended to negotiate. Ace had shareholder agreements with 33.5 percent of Capital’s shareholders. Therefore, unless Capital’s board acted to terminate the agreement, Ace was practically guaranteed enough votes for the merger, even if a better offer was made. Capital entered discussions with XL Capital (XL) about a competing offer without written advice of outside counsel. Capital’s board wanted to terminate the agreement with Ace and accept a better offer from XL. Ace requested a temporary restraining order against Capital from the Delaware Chancery Court barring Capital from terminating the agreement.

Rule of Law

The rule of law is the black letter law upon which the court rested its decision. To access this section, start your 7-day free trial of Quimbee for Law Students.

Issue

The issue section includes the dispositive legal issue in the case phrased as a question. To access this section, start your 7-day free trial of Quimbee for Law Students.

Holding and Reasoning (Strine, J.)

The holding and reasoning section includes:

  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

To access this section, start your 7-day free trial of Quimbee for Law Students.

Here's why 89,000 law students rely on our case briefs:

  • Reliable - written by law professors and practitioners not other law students.
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your class - works on your mobile and tablet.
  • 12,195 briefs - keyed to 164 casebooks.
  • Uniform format for every case brief.
  • Written in plain English - not in legalese and not just repeating the court's language.
  • Massive library of related video lessons - and practice questions.
  • Ability to tag case briefs in an outlining tool.
  • Top-notch customer support.
Start Your Free Trial Now